Sensex Trades Weak; FMCG Stocks Drag

Wed, 26 Sep 12:30 pm

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Stock markets in India are trading in negative territory weighed by fast-moving consumer goods (FMCG) stocks.

The BSE Sensex is trading lower by 160 points (down 0.4%), and the NSE Nifty is trading lower by 30 points (down 0.3%). Meanwhile, the BSE Mid Cap index and the BSE Small Cap index are trading flat. The rupee is trading at 72.71 to the US$.

2018 has been an eventful year, to say the least. The Sensex touched all-time high of 38,990 last month.

The rupee touched an all-time low. The crude is going up and gained around 13% in 2018.

The midcap and smallcap indices are feeling the heat. They are down by about 9% and 13% respectively. Whereas, the Sensex is the outperformer with an increase of 12%.

And here's how sectorial indices are performed in 2018.

Pharma and IT Outshine Their Peers

BSE IT index is up whopping 41% in 2018. The BSE Healthcare index also did well and is up 8.5%.

Over the last three months, the BSE Healthcare index rose by 24%.

Whereas, the BSE Auto and the BSE Oil & Gas indices were down 8.6% and 9.1% respectively.

With the rupee breaching the 72 mark, IT and pharma are outperforming all other indices.

In the near term, the rupee being under pressure could benefit export-oriented businesses.

And Kunal Thanvi's last month's Smart Money Secrets recommendation will benefit from the rupee depreciation.

If you're a Smart Money Secrets subscriber, read the detailed report here.

If not...you can get the report by signing up here.

In the news from IPO space. As per an article in a leading financial daily, the initial public offer of housing finance company Aavas Financiers was subscribed 0.03 times so far on the second day of bidding today.

The IPO to raise Rs 17.3 billion received bids for 4,36,320 shares against the total issue size of 14.8 million shares.

The portion set aside for qualified institutional buyers was subscribed 0.09 times and retail investors 0.01 time.

The IPO comprises fresh issue of up to Rs 4 billion and an offer for sale of up to 1,62,49,359 equity shares, including anchor portion of 63,36,439 equity shares. Price band for the offer has been set at Rs 818-821 per share.

Aavas Financiers had on Monday raised Rs 5.2 billion from anchor investors.

The shares of the company will be listed on the BSE and NSE. Aavas Financiers offers housing loans to customers from low and middle income segments in semi-urban and rural areas.

Speaking of IPOs, the stock market is gearing up for a burst of IPO activity.

According to EY India IPO Readiness Survey Report, globally, Indian exchanges recorded the highest IPO activity as the country saw 90 IPO launches that raised US$ 3.9 billion in the first half of this year.

We believe a merit-based selection, primarily including valuation, business, and management quality, is the logical way to go about investing in IPOs. If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.

To know how to safely profit from the ongoing IPO rush, download this FREE report now and discover How to Get Rich with IPOs.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

In the news from the telecom sector. As per an article in a leading financial daily, the foreign direct investment (FDI) in the telecom sector has grown nearly five times in the last three years, from US$1.3 billion in 2015-16 to US$6.2 billion in 2017-18.

As per the Union Telecom Minister Manoj Sinha, the new sectoral policy in works envisages the FDI in the telecom space to reach US$100 billion by 2022. He added that FDI would be key to unleash the full potential of upcoming modern technologies.

Sinha has stated that the government is keen on providing 5G services in India at a par with global standards in 2020, which will play a key role in harnessing new emerging technologies like machine-to-machine communications, internet of things, artificial intelligence, etc.

The minister further said that India needs massive investments in developing newer technologies which are accessible and affordable to the people and at the same time create productive employment.

Further, he also said that India is poised to become the third largest economy in the world over the next two decades and it is the most opportune moment for the investors across the world to invest in India.

Speaking of telecom sector, the whole telecom business has been an underwhelming story so far. While the telecom subscriber base has increased from 300 million in 2008 to 1.2 billion in 2017, investors have little to cheer.

Here's what we wrote about the struggling telecom sector in one of our issues of The 5 Minute WrapUp:

• Telecom companies are straddled with high debt, intense competition, and lack of pricing power. High spectrum costs and regulatory issues have hampered the sector. While consumers have benefited from low costs and new players fighting for their share, investors have suffered.
  
  With the entry of Reliance Jio, the competition has intensified further. Reliance Jio's low cost offerings and strategy of capturing market share will further dent the sector. The sector has been a classic 'valuet trap'. While it always looks cheap compared to other sectors, it has failed to provide any reasonable returns. We also believe the situation is unlikely to change in the near future. For an investor, it's important to differentiate between 'value' and 'value traps'.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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